When Chris maximises his total utility, then his entire available budget is allocated in such a way that the
A) marginal utility is as large as possible for goods.
B) quantities consumed of each good are equal.
C) marginal utility per dollar is equal for all goods.
D) marginal utility will start decreasing if he consumes fewer goods.
E) marginal utility of all goods is equal.

Question

Quizplus · Accepted Answer

Maximising total utility involves allocating the available budget in such a way that the marginal utility per dollar is equal for all goods. This ensures that the last dollar spent on each good provides the same level of satisfaction. Allocating the budget in any other way would mean that the total utility could be increased by reallocating the budget toward goods that provide more marginal utility per dollar.

When Chris Maximises His Total Utility, Then His Entire Available